Who Must Pay Advance Tax and When
Advance tax is the 'pay-as-you-earn' scheme under which any taxpayer whose estimated tax liability for the year (after reducing TDS/TCS credit) exceeds ₹10,000 must pay tax in installments during the financial year itself, rather than as a lump sum at the time of filing the return. This applies to salaried individuals with significant other income, self-employed professionals, businesses, and companies alike — salaried employees whose entire tax is covered by employer TDS are typically exempt in practice, but the obligation technically applies if there is a shortfall.
The statutory cumulative payment schedule for non-presumptive taxpayers is: 15% of the estimated annual tax liability by 15 June, 45% (cumulative) by 15 September, 75% (cumulative) by 15 December, and 100% by 15 March of the financial year. Missing any of these checkpoints triggers interest under Section 434 (see the Section 234A/B/C Calculator) even if the annual total is eventually paid correctly.
Taxpayers who have opted for the presumptive taxation scheme for business or professional income are permitted to pay their entire advance tax liability in a single installment on or before 15 March, without needing to meet the quarterly cumulative checkpoints.
Senior citizens (age 60 or above) who do not have any income from business or profession are exempt from the advance tax payment obligation altogether — their entire tax liability can be settled through self-assessment tax at the time of filing without attracting Section 433/434 interest.
Worked Example: Quarterly Advance Tax Schedule
A self-employed professional estimates total tax liability of ₹4,00,000 for FY 2026-27, with no TDS credit expected.
Frequently Asked Questions (FAQs)
At what tax liability threshold does advance tax become mandatory?
Once estimated tax payable for the year, after reducing available TDS/TCS credit, exceeds ₹10,000, the taxpayer is required to pay advance tax in installments rather than waiting to pay it all at return-filing time.
Are senior citizens required to pay advance tax?
No, senior citizens (age 60 or above) who have no income from business or profession are specifically exempt from the advance tax payment requirement and can pay their full liability as self-assessment tax when filing the return, without interest exposure.
What is the advance tax schedule for presumptive taxation taxpayers?
Taxpayers under presumptive taxation schemes for business or professional income can pay 100% of their advance tax liability in a single installment by 15 March, instead of following the quarterly 15%/45%/75%/100% cumulative schedule that applies to other taxpayers.
What happens if I underpay an advance tax installment?
Interest under Section 434 (successor to old Section 234C) is charged on the shortfall for that specific quarter, generally at 1% per month for a period of 1 to 3 months depending on which installment was missed, even if the shortfall is made good in a later installment.
Can advance tax be revised during the year if my income estimate changes?
Yes, advance tax is based on your own estimate of annual income and can be revised at each installment date — if your estimate increases mid-year, later installments should be adjusted upward to avoid a cumulative shortfall and Section 433/434 interest exposure.